Global Roundup (August 21)

Deutsche Postbank enjoys tighter spread ... Norway's sovereign wealth fund prefers covered bonds to U.S. Treasuries ... Bank of England accepts wider range for repos ... and more

Some items of covered bond news do not rate their own story in this publication—often because they relate to geographic areas outside our focus, North America.  Even so, readers who want to keep up with covered bond news in general might find them interesting.

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CYPRUS

As part of a Public Information Notice, the International Monetary Fund (IMF) stated Monday (Aug. 17) regarding Cyprus and its central bank: "There has been significant progress in implementing EU Directives and recommendations made by the recent Financial Sector Assessment Program (FSAP). In particular, deposit insurance coverage and funding has increased; a crisis management law is being drafted to empower the government to preemptively address liquidity or insolvency problems; and a legal and regulatory framework for covered bonds has been initiated to facilitate the availability of refinancing under the ECB's facilities. Nevertheless bank soundness indicators are being adversely affected by the economic environment" (italics added).

EUROPE (in general)

• European Central Bank (ECB) President Jean-Claude Trichet, responding to speculation that the ECB might not spend the entire €60 billion announced for its covered bond purchase program, stated at a press conference (Aug. 6): "There is no intention at all to change our decision to go up to the €60 billion."

• Reuters cites analysts (Aug. 7) as expressing surprise that the ECB's covered bond purchases so far have focused on the secondary market, but believing that the ECB eventually will shift to new issuances.

• Although an electronic auction program for covered bonds (from Eurex Bonds) was utilized for only €4 million in trades since its launch in July, an article in Dow Jones Newswires (Aug. 6) cites some bankers to the effect that "the regular auctions are still helping improve conditions in secondary-market trading."

FRANCE

Moody's Investors Service (Aug. 5) assigned a definitive long-term rating of Aaa to series 15 residential covered bonds issued by BNP Paribas under the home loan covered bonds program it established in November 2006.

GERMANY

Deutsche Postbank Thursday (Aug. 20) announced plans to add €500 million (USD $705 million) to its existing €1 billion, five-year covered bond with a maturity date of July 2015.  Final guidance was 12 basis points over mid-swaps-a notable tightening from the 37-point spread at initial issuance (July 3).

 In a Q2 2009 earnings conference call by Commerzbank AG (Aug. 6), it was noted that "[s]upported by a more receptive mortgage covered bond market, the Pfandbriefe, [Commerzbank] issued Jumbos with a total volume of €4.75 billion, and private placements contributed €2.45 billion."

A posting by Tracy Alloway in FT Alphaville (Aug. 5) quotes Dresdner analysts as writing that a recent statement on covered bonds by the German government "once again proves the strong systemic support benefiting the German Pfandbrief, which is a very important positive credit factor for investors, in our view."

ITALY

 The UK Listing Authority Monday (Aug. 3) approved for listing a prospectus dated July 31 relating to the Euro 10,000,000,000 Covered Bond Program of an Italian bank, Unione di Banche Italiane S.c.p.a.  To download the prospectus (for educational purposes only—not authorized for sale in the U.S. and various other jurisdictions), click here.

NETHERLANDS

A rating action by Fitch Ratings (Aug. 4) notes that Aegon Bank "will become more diversified through a planned covered bond programme."

NORWAY

The manager of Norway's 2.39 trillion krone (USD $400 billion) sovereign wealth fund stated that it is favoring European covered bonds while going underweight on U.S. Treasuries, according to a story Thursday (Aug. 20) by Anchalee Worrachate of Bloomberg.

SOUTH KOREA

Korean Housing Finance (KHF) reportedly is considering issuance of a  USD $1 billion covered bond later this year.

SPAIN

• In the wake of Banco de Andalucía's absorption into its parent, Banco Popular Español, Fitch Ratings Monday (Aug. 14) affirmed Banco de Andalucía's mortgage covered bonds at 'AAA' and withdrew the rating.  The agency simultaneously affirmed Popular's mortgage covered bonds at 'AAA.'

• La Caixa added another €750 million to its May issuance of €1.25 billion, bringing the total to €2 billion, according to a report (Aug. 4) in Europa Press.  At 80 basis points over mid-swaps, the spread was 40 basis points tighter than the May issuance. 

SWEDEN

The Swedish Covered Bond Corporation (SCBC) has thus far issued SEK 28,713 million in covered bonds under the Swedish government's guarantee program for medium-term funding, SCBC's parent company stated Monday (Aug. 14).

SWITZERLAND

Paris-based Compagnie de Financement Foncier successfully issued a 250M Swiss franc issue with a 10 year-maturity last Thursday (Aug. 13).

UNITED KINGDOM

• The Bank of England announced Thursday (Aug. 20) that it will now accept a greater range of covered bonds for certain repo open market operations and its discount facility, including covered bonds backed by SME loans.  A commentary on Reuters Blogs (Aug. 21) notes: "to my knowledge, there is no such thing as an SME covered bond — yet."

• The Britannia Building Society gave notice to covered bondholders (July 31) that its £1,400,000,000 Floating Rate Global Covered Bonds Due 2012 will now be listed on the London Stock Exchange as obligations of The Co-operative Bank p.l.c., in connection with Britannia's merger with Co-operative.   In conjunction with the merger, Fitch Ratings took actions (Aug. 3) including downgrading Co-operative's Long-term Issuer Default Rating (IDR) to 'A-' from 'A,' affirming the 'AAA' rating of Co-operative's covered bonds, and affirming the 'AAA' rating of the covered bonds issued by Britannia.  Similarly, Moody's (Aug. 6) confirmed the rating of Co-operative's covered bonds at Aaa.